Public sector use of interim managers increasing now 40% of all new instructions

Public sector use of interim managers increasing – now 40% of all new instructions

• Bounceback follows sharp fall after Government started austerity drive

• Treasury crackdown on interims fails to dent recovery

• NHS and local government see particularly strong demand

There has been a sharp recovery in the number of new enquiries for interim managers from the public sector, reversing falls after the Government started to implement its austerity programme in 2010, says Interim Partners, a leading provider of interim management solutions.

Interim Partners says that 40% of all new instructions for interim managers came from the public sector in Q3 2012, up from 27% in Q3 2011.* The proportion of enquiries from the public sector hit a low of 22% in Q4 2010, as the government started to implement its swingeing cuts to public sector budgets. (see graph)

Interim executives are managers or other senior executives, at or just below board-level, who are recruited on a short term basis.

Steve Melber, Associate Director at Interim Partners, comments: “Demand for interim managers from the public sector has been very buoyant recently, with particularly high demand in the NHS. The public sector has been going through a huge amount of change while under intense budget scrutiny, and interim managers have been increasingly critical in delivering these programmes.”

Interim Partners points out that the public sector’s use of interims has increased despite last year’s Treasury-led restrictions on senior interim executives in the public sector.

Interim Partners explains that in May 2012, the Treasury announced a crackdown on Government staff working & lsquo;off payroll’, meaning that staff at director-level and above are expected to be on the payroll, apart from in exceptional circumstances.

The changes stem from revelations in early 2012 about some senior civil servants’ pay structures. Some public sector workers, who were effectively in permanent employment, were alleged to have used personal service companies to reduce their National Insurance Contributions and income tax payments.

Percentage of all new enquiries for interim

managers from the public sector

Steve Melber says: “Public sector demand for interims has remained very strong in the face of significant headwinds. Perversely there was a big fall in the public sector’s use of interim managers when the coalition’s austerity programme was first implemented – even though interim managers are an extremely effective tool in reducing costs without compromising service delivery.”

“Last year’s Government’s proposals were simply a knee-jerk reaction to negative headlines on the pay structures and employment contracts of some long-term civil servants and their use of personal service companies. Whilst this is a serious issue, any reaction should not undermine the position of genuine interim managers.”

“Interim managers are increasingly playing a vital role in the Government’s austerity programme, helping public sector organisations to cut costs while maintaining service levels. By attacking the use of interims, the Government is discouraging the use of a highly effective resource.”

NHS and local government are heavy users of interim executives

Interim Partners says that the NHS and local government have seen particularly high demand for interim executives.

Interim Partners explains that the NHS is undergoing major structural changes as a result of the Health and Social Care Act, which are driving demand for interim managers. Primary Care Trusts have been replaced by Clinical Commissioning Groups, creating demand for interims that can oversee the transition.

NHS hospital trusts are also required to make annual cost savings of at least 4-5%, and in some cases up to 10%, creating demand for specialist cost-cutting interims, with experience of delivering those results for other organisations.

Interim Partners says that demand for interims in local government bodies has also remained strong, as local authorities use interims to help them achieve cost savings without compromising service delivery.

Average daily rates for interims fall

The average daily rates for interim managers in the public sector also fell 3% in Q3 from &pound644 in Q2 to &pound624 in Q3 this year, its lowest level since Q1 2007.

Steve Melber adds: “The slight decline in average pay could be caused by the public sector hiring fewer of the most senior board level interims who are paid the most. It is a shame that politics have got in the way of the public sector’s use of senior interims to deliver better services for less money.”

“Very senior interim managers play an important role in the public sector of replacing senior staff at short notice in crisis or turnaround situations. These roles are much less appealing to interims now, because of the Government attitude to pay for interims.”